Guyana says amended oil agreement can’t be basis for full renegotiation of deal with ExxonMobil

Last Updated on Sunday, 18 September 2022, 23:37 by Denis Chabrol

The Guyana government on Sunday sought to debunk claims that an amendment to the Production Sharing Agreement (PSA) with the ExxonMobil-controlled consortium sets the stage for wide-ranging changes so that Guyana can draw down more money from the deal on the prolific Stabroek Block.

The Irfaan Ali-led administration aimed to allay likely fears that it could take on board Chartered Accountant Christopher Ram’s assertion that the PSA could undergo major changes through renegotiation. “The government reiterates that the contract will remain fiscally unchanged for the country and investors’ benefits,” the Ministry of Natural Resources said in a statement.

Neither the then David Granger-led coalition government nor the People’s Progressive Party Civic (PPPC) administration had mentioned that the PSA had been amended under Mr Granger’s signature that the ExxonMobil majority-owned Esso Exploration and Production Guyana Limited (EEPGL) could reclaim the 2 percent royalty. The privately-owned independent Stabroek News newspaper on Sunday reported that A Partnership for National Unity+Alliance For Change (APNU+AFC) coalition administration had amended the 2016 PSA on April 26, 2019 to prohibit the recovery of royalty.

According to the Guyana government on Sunday, that modification has been implemented and enforced through the mechanisms on the payments for royalties and cost recovery conditions, and the monitoring features which set out for the governance of the cost bank regarding the projects subject to petroleum operations.

The Ministry of Natural Resources admitted that it was “fully aware” of the 2016 amendment but seemed at pains to insist that there would be no renegotiation of “specific fiscal considerations” in existing PSA as that “could impose unfavourable effects on current and future investments in Guyana, given the current world petroleum economy.”

“The Government of Guyana respects the investments made by the petroleum consortium in the Stabroek Block and will continue to work assiduously, through various agencies, on every additional license and environmental permit as has been done for Payara and Yellowtail developments,” the Ministry added.

That Ministry also seized the opportunity to rule out the existing PSA on the Stabroek Block being applied to other blocks for production or exploration. “This includes the upcoming competitive bidding round that the government intends to host in the last quarter of this year and other commercially viable discoveries that will be made in other oil blocks. The 2016 model or any previous PSA will not be applied to any other oil block where a discovery has been made,” according to the Natural Resources Ministry.

ExxonMobil is the major operator in the Stabroek Block, alongside Hess and the China National Overseas Oil Company (CNOOC).

More than 20 oil fields have been found offshore Guyana.